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April 2012

(2011) 41 VST 1 (SC) CST v. Chitrahar Traders

By C. B. Thakar | Advocate
G. G. Goyal, Janak Vaghani | Chartered Accountants
Reading Time 1 mins
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Rate of tax — Sale of condemned plant closed as unviable — Machinery dismantled by buyer using explosives and transported as scrap — Sale of scrap of iron and steel — Attracts rate of 4% tax — Schedule-II, Entry 4(1)(a) of the Tamil Nadu General Sales Tax Act, 1959.

Facts:
The Department filed appeal before the SC against the judgment of the Division Bench of the Madras High Court holding sale of plant closed as unviable and dismantled by buyer using explosives and transported as scrap, attracting 4% rate of tax applicable to scrap of Iron Steel under Entry 4(1)(a) of Schedule-II of the Tamil Nadu General Sales Tax Act, 1959.

Held:
The SC after considering terms and conditions of agreement and other documents held that what was sold by the dealer was nothing else but scrap and not the machinery. The appeal filed by the Department was dismissed and the decision of the Division Bench of the Madras High Court was upheld.

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